Climate Policy Shocks Propagation in Electricity Markets: An Agent-Based Approach

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Working paper
Tomas Balint, Antoine Mandel
The process of electricity production, distribution, and consumption represents a complex system with many heterogeneous characteristics. Physical constraints of the electricity, especially the difficulties with its storage, pose specific challenges on the structure of the power network and the parameters of production nodes. In order to better understand the complexity of the electricity market and to study the impacts of climate policies on the ownership structure of the production portfolios, we have developed a simple agent-based economic model. The main ambition of the model is to follow the propagation of shocks on revenues of energy companies induced in the electricity markets through the application of various climate policies. Special attention is paid to the investigation of structural changes in the portfolio and financial performance of the energy companies in function of these climate policies.
Developed by Paolo Gittoi